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Talking to Kids about the Recession

Maybe your three-year-old is wondering why Mommy or Daddy is home so much now. Or your recently tightened budget has forced you to ask your fourth grader to decide between summer camp and picking up a new musical instrument. Here are some ideas on how to put the recession in terms children can understand and in the process, make the whole family feel empowered.

Keeping kids active and social is key to their development and well-being, but in these tough times, the price tag of organized activities means something has to go. Linda Shrieves of the Orlando Sentinel writes about a friend’s husband who lost his job, only to find a position that paid far less. Among more significant privations, their kids may have to drop out of their weekly bowling league. Meanwhile, Shrieves is considering a less expensive summer camp for her own daughter.

Parents across the country are also giving sensible, affordable clothes—items until recently considered an everyday expense rather than an extravagance—as presents instead of toys. Retailers picked up on this trend during their holiday 2008 advertising campaigns.

However, kids accustomed to receiving five game consoles on Christmas and expecting a Mercedes S-Class on their Sweet 16 will probably wrinkle their noses at a holiday full of shirt boxes.

Michael Melcher of The Huffington Post suggests that you and your kids read books set during past periods of economic distress that promote the values of family love over materialism. Some books he profiles as a starting point: Sydney Taylor’s “All-of-a-Kind Family” series about a early 20th-century Jewish immigrant family living in the tenements of New York’s Lower East Side and Laura Ingalls Wilder’s “Little House” books on her pioneering childhood in the Midwest.

Closer to home, tales from older relatives who have survived the Great Depression and other economic downturns can help put hard financial times into perspective for youth. The Wall Street Journal reports that a study of 65 families by Atlanta’s Emory University found that teens who could recount family stories showed a lower rate of depression, anxiety and anger.

For family stories to be an effective way to convey a deeper message, they need to be relevant to a child’s immediate worldview, writes the Journal. Along similar lines, there should be plenty of age-appropriate discussion about family finances.

“From the time they start elementary school, show your kids your pay stubs and bills to help them conceptualize where money comes from and how it is spent,” suggests MSNBC. Teenagers can benefit from learning about the definition of the word “recession” as well as how the economy got to this point. “A lot of teens don't understand how credit works,” Gabe Graumann, the author of financial blog “Money Talk with Gabe” told MSNBC. But parents can educate their kids “that when you borrow money there’s interest that you pay to someone else, that's a risk you're taking and there is liability attached.”

Children of all ages can benefit from taking a role in household budgeting. For example, a family can decide on what expenses they can cut back in order to have a luxury further down the line, such as a family vacation. In addition to teaching the merits of saving and delayed gratification, it can help children feel that their giving up dance lessons is helping the family.

But keep in mind that scaring kids is not the answer, say experts. Children younger than 8 need to be reassured that their parents will provide for them. However, advises an ABC News article, older kids “can learn the difference between their wants and needs—that they don't need a new video game just because a friend got one.”